Despite strong gains in lending and deposit growth over the past year, slowing member growth is a primary concern for many of America's credit unions. Even though the number of national credit union members continues to steadily increase, the annual rate of membership growth has fallen well below historic levels.
As of June 2008, 3,805 credit unions reported positive annual member growth, while 4,330 credit unions reported negative annual member growth. Eighty percent of credit unions reporting negative growth were under $50 million in assets. National credit union membership grew at an annual rate of only 1.25% between June 2007 and June 2008. The industry membership growth rate has not been above 2% since 2003.
Over the last decade, many credit unions have converted to community charters or accumulated a large and diverse number of employer relationships, thus lowering the barrier for membership enrolment. As the number of potential members expands, more business development resources are often allocated toward efforts designed to target a mass audience. As a result, the role of specific SEG development initiatives have somewhat diminished in importance.
Educational and promotional expenses per net new member have steadily increased over the past five years. An average of $467 was spent upon every net new credit union member as of mid-year 2008. It is often more cost-effective to reach a target audience of potential and existing members through a specific SEG channel rather than general media. Most credit unions traditionally grew through a single sponsor or multiple SEG relationships, and it’s important to remember how unique and beneficial these relationships can be. Despite a credit union’s type of charter and primary focus, there are many advantages to working through specific employer groups.
Consider These Effective SEG Development Strategies:
- If you don’t have a business development program at your credit union, create one.
- It is critical to have a person or group within the credit union specifically charged with handling business development initiatives and providing a primary contact point between the credit union and employer groups.
- Focus your efforts.
- Do not 'collect' as many SEGs as possible just for the sake of doing so. It won’t be beneficial for either party if you are unable to devote enough resources toward fostering the relationship.
- If you have a very large number of employer relationships, it is important to identify a select group of 'primary targets.' Then focus additional resources at this specific group in order to increase product and service penetration.
- Conduct market research.
- This should be a priority for any credit union, but is especially critical for those that rely on a single sponsor or several multiple employer groups for their membership base. Keep a finger on the pulse of an organization through surveys or regular interaction. Your credit union should be consistently aware of the needs of the organization and its employees, so that you are ideally positioned as a responsive partner.
- E.g. Offering a payday lending alternative if you hear that employees have been requesting advances on their paychecks.
- If you have a wide variety of SEGs, then you need to offer a wide variety of products to effectively serve these constituents.
- Strategically decide which mix might be the most appealing to promote to each individual employer group
- A new product offering can re-invigorate a stale SEG relationship.
- New products and services, such as HSA accounts or expanded business services, present great opportunities to re-engage existing employer groups with a new value proposition.
- Create an employee referral program
- Considering that it costs an average of several hundred dollars to attract each net new member, an incentivized employee referral program can be a cost-effective way to grow new members and create a buzz about your credit union at the workplace.
- Education presents a prime opportunity to engage employer groups.
- Especially in today's economic climate, there is great interest in learning about financial planning, as employees across the nation wonder how they will ever be able to afford retirement.
- Many companies welcome the opportunity for a trusted financial institution to provide free educational seminars focused on such topics.
- Become involved in large company events
- One of the only opportunities to integrate yourself with all of the employees at once in a fun and very visible setting.
- There are also opportunities to partner with one of your employer groups to sponsor a local community event.
- If most of the large business in your area already have SEG relationships with other credit unions or aren't interested in a financial partner, focus on small-to-medium sized businesses that have been overlooked.
If you would like to learn more about how credit unions are working through employer groups to reach new members and grow existing relationships, join us for the Callahan webinar event: Developing SEG Relationships to Achieve Organic Member Growth. This event features speakers from credit unions that have achieved strong member growth by successfully leveraging their SEG relationships.